Start up Stories – Exotel

Exotel is a cloud telephony platform that supports business, start-up, and small and medium-sized organisations in India and Southeast Asia with their communication needs.

Exotel collaborates with various telecom providers to obtain numbers from them, links them to its software, and then makes them available to customers upon request. Exotel receives income from both actual telephone usage and a monthly leasing fee. According to Karthik, Exotel lowers the cost and shortens the wait time for a telephone connection. With operations in Chennai, Bangalore, Mumbai, Delhi, Hyderabad, and Ahmedabad, Exotel now has roughly 350 clients.[1] In 2011, Shivakumar Ganesan, Ishwar Sridharan, and Siddharth Ramesh founded Exotel. In order to interact with its customers through touch points like web chat, co-browsing, and videos, Exotel provides its clients with a full-stack platform with services including contact centres, APIs, voice, and chat bots.[2] Exotel’s software is used by Indian ride-hailing firm Ola to text its consumers. When the delivery partner calls the customer, the startup is used by food delivery company Swiggy to hide the phone numbers. Relationship managers at the sizable Indian bank HDFC Bank utilise Exotel to communicate with clients who have savings accounts. According to Shivakumar Ganesan, co-founder and CEO of Exotel, this engagement “involves bringing together disconnected channels, bots, and applications with siloed customer data across teams.” With our full-stack platform, we are enabling this over the cloud for the first time. The need for an efficient communication strategy is growing over time, and Exotel successfully implemented one by enabling communication for nearly all internet startups in India, according to a statement from Puneet Kumar, managing director at Steadview Capital. “We are happy to be part of their next growth phase and enjoy their aim of establishing an end-to-end communication stack to enable organisations to communicate with customers intelligently.” In every sense of the term, Exotel is the underdog. Employees are referred to as “Gauls” even within the company, a reference to a little tribe in Caesar’s Rome that thrived and fought the numerically and culturally superior Romans at the height of their power, and a community made popular by the Asterix and Obelix comics, according to the source.

The firm, which has over 1,000 employees, currently makes $50 million in annually recurring income. As it expands its capabilities and attracts more clients, it hopes to increase this amount to $200 million. By the end of the year, it hopes to hire roughly 200 individuals.

The startup competes in a market that has recently drawn the interest of several large corporations, including Microsoft, Amazon, Twilio, Salesforce, and Zoom as businesses race to construct or buy the technologies necessary to establish one-store service centres. Shivakumar designed an internal product for his former business, Roopit, which required a straightforward automated call centre solution. Roopit subsequently became Exotel. Exotel, whose core team is made up of his former classmates and pals from BITS-Pilani, generated more over Rs 1 crore in sales during the previous fiscal year. In all, Mumbai Angels, a group of wealthy people who invest in and coach start-ups, and Blume Ventures, a venture capital firm that provides seed-stage finance, contributed Rs 2.5 crore to the company’s first round of funding. Additionally, Exotel is preparing to raise additional capital since its business is anticipated to grow.

Since its initial investment round of Rs 2.5 crore in 2012, no investor has been involved with them. Co-founders quit the company at that time, it nearly went out of business or was sold several times, employees were laid off, and well-funded rivals were breathing down its neck. The founders struggled with dissatisfaction and self-doubt. Yes, there was the issue of the worldwide pandemic.[1] In 2021. Exotel acquired two companies and raised $100 million, 300 times its initial amount. It went from being a startup unknown to becoming a startup VIP, causing sudden silent rumour and even alarm among Indian tech investors. In 2021. Exotel acquired two companies and raised $100 million, 300 times its initial amount. It went from being a startup unknown to becoming a startup VIP, causing sudden silent rumour and even alarm among Indian tech investors. Exotel’s revenue has increased fourfold to roughly $55 million yearly during the past 18 months, and its value has increased even further to about $400 million. But Ganesan had not even intended to accomplish this.  Former Yahoo and Flipkart executive Ganesan intended to purchase a refrigerator in 2010. “I said let me buy a used fridge so I don’t squander money. There must be someone out there who wants to give away their fridge because I couldn’t find one and thought that was strange.

History of Exotel

Ganesan decided to build a marketplace (basically a classifieds portal) to purchase and sell goods as a result. “There was no smartphone usage. So, when you send an SMS stating, “Second-hand fridge for sale,” you receive two to three replies asking for further information and the seller’s name, he recalled. Similar to how a phone call operates, Ganesan’s voice recognition system will link you to the first buyer, second buyer, and so on. These days, people call those things bots. In a sense, Ganesan was Exotel’s first client. Exotel was informed by every investor in town that they would not invest because Indian SMBs are just not a large enough market for software sales (a belief that is still held by investors today). One co-founder, Vijay Sharma, quit due to lack of funding and dim future prospects. Ganesan, Ishwar Sridharan, and Siddharth Ramesh were the only ones who remained, but they were unsure about their future plans. Ganesan was compelled to shift his focus from SMBs to corporations and from cloud contact centres to a platform that enables end-to-end communication when the funding round did not materialise. Although it wasn’t simple, it was the right decision (more on that later). It entailed shifting convictions the founders had held for a long time, accepting the unpleasant reality of a failed fundraise, and turning around a SaaS business whose leader lacked prior SaaS experience . Ankit Bhati, the co-founder of the wildly popular Ola cab-hailing app, called him in 2015. Bhati intended to use Exotel’s APIs to allow users to communicate with one another without exchanging phone numbers. New apps that emerged in industries including e-commerce, logistics, online education, and doctor consultations all started using Exotel in 2014–2015, as India experienced its first significant technology financing boom

Challenges

Investors rejected Exotel, among other things because they believed its rival Knowlarity, funded by Sequoia, had cornered the market first and then, strangely, underperformed despite Sequoia’s investment.

“A large factor in why many investors didn’t take Exotel seriously was familiarity. They had raised 20–30 times as much money as Exotel and were seen as the obvious elephant in the room. However, while Exotel recognised the small size of the SMB market and focused on business clients, Knowlarity focused more on SMBs and never really took off as much as they should have or were anticipated to, according to a person familiar with the company’s operations. Compared to Exotel’s Rs 350–400 crore in annual income, Knowlarity’s ranges between Rs 100–120 crore. Ambarish Gupta, the company’s creator, left in 2018, and Yatish Mehrotra, a former COO of Airtel, is now in charge.

However, Exotel continued to expand financially and drew a variety of suitors in 2017–18. It received two acquisition offers, one of which got to a certain stage before the buyer withdrew. A party to the transaction claimed that investors were losing confidence as a result of the purchasing company’s stock price being crushed on the stock exchange. The $14 billion acquisition of Five9, a communications software platform comparable to Exotel, by video communication giant zoom, was unsuccessful for identical reasons. Ganesan expressed his frustration, rage, and anxiety but did not address why the acquisition did not take place. After years of labour, there was now no hope left. The founders would be upset even if gross margins decreased by 2% one month. “This is never seen in startups. Profits took over as their dominant culture and gene. The Indian startup scene was at this point thriving, with numerous new unicorns and sizable fundraising rounds. Even Walmart’s $16 billion acquisition of Flipkart was coming. The heart of any tech company, engineering talent, was a challenge for Ganesan. Siddharth Ramesh, a different co-founder and CTO, quit in 2018. Ganesan concentrated on creating Exotel an enjoyable workplace where employees can tackle intriguing challenges, despite the fact that it couldn’t guarantee the pay or stock options of other hot companies. Exotel’s senior personnel has stayed with the company for 6 to 8 years, proving the plan was successful. Exotel generated annualised revenues of more than Rs 100 crore in the beginning of 2020. The tide started to change. On the horizon was a new contract. Since 2012, Ganesan and Gautam Mago, a partner at A91 Partners, have maintained contact, corresponding occasionally more as friends than as investors. Much less as an investment given that Mago was a partner at Sequoia India up until 2017, which holds more than 50% of rival Knowlarity. However, he observed that Knowlarity struggled financially while Exotel slowly grew without it. Exotel’s $5.4 million Series B investment was eventually led by A91 in late 2020, but the deal had been in the works for a year. “Before the pandemic, we had made the decision to invest. It is uncommon to discover a blend of resilient product and business building quality. Shivku epitomised that, according to Mago, speaking to Moneycontrol. The epidemic, however, caused Exotel’s revenues to drop by 50% in April. With past profits poured back into the company, it only had Rs 5–10 crore in the bank And 50 out of 180 individuals had to be let go, which Ganesan claims was one of the hardest decisions he had ever made but had to be made.

New Hope

But three to four months into the pandemic, a new pattern started to emerge. Previously heavily offline businesses like banking and insurance needed communication support as more people worked from home, such as collection calls, contact centres, and click-to-call relationship managers. Exotel steps in to the rescue. Similar to other sectors, increasing digital use enabled Exotel to obtain more money, operate more quickly, and even complete two acquisitions—Ameyo and Cogno AI

Exotel Today

Every single transaction that took place offline today will take place remotely in the future. And only effective communication technology will make that possible. So it makes perfect sense to invest in the communication business. Global investors did,” Ganesan claimed, adding that even he had not anticipated that things would be going this well.

However, the Exotel of today is practically unrecognisable from the Exotel of 2019 since it not only has the freedom but also the need to grow quickly and profitably. Ganesan has made a conscious effort to shift from a cautious to an aggressive approach. He has ordered internally that efficiency must be prioritised before speed, which was inconceivable not long ago. Exotel now plans to expand its capabilities with video, voicebots, and a customer data platform in addition to stepping up its marketing initiatives in the Middle East and South East Asia. Ganesan continues to be concerned that Exotel could become side-tracked and stumble in its execution—the one aspect that has kept it going all these years. Although compared to his difficulties throughout the years, it is a much smaller concern. Ganesan continues to be concerned that Exotel could become side-tracked and stumble in its execution—the one aspect that has kept it going all these years. Although compared to his difficulties throughout the years, it is a much smaller concern.

In a few years, he hopes to go public with the business. Ganesan owns 16 percent of the business, and the founders collectively hold around 30 percent of it. They may gain the fortune and fame that many other founders had in the modern era in half the time with a successful initial public offering.

Reference

https://inc42.com/startups/the-story-of-exotel-into-the-cloud/

https://www.moneycontrol.com/news/business/startup/the-rise-fall-and-resurrection-of-a-startup-how-exotel-persevered-through-a-tumultuous-decade-7960221.html

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